Europe ETFs have been detracted by political risk over the past year, but with a steadier political environment, investors can look to steady growth outlook.

“We see a steadier Eurozone political environment helping support growth and reform momentum – and bolstering the case for the region’s equities,” BlackRock strategists, led by Richard Turnill, said in a research note.

Eurozone politics have entered a calm period, and the steadier political environment could support sustained, above-trend economic growth, along with some added reforms, potentially “bolstering the case for investing in the region’s equities, in our view,” according to BlackRock.

The anti-euro government sentiment and flareups of nationalism have died down as no major party is pushing to exit the Eurozone. French President Emmanuel Macron is expected to enact a pro-growth agenda with the help of a majority backing in parliament, with labor reforms already off to a good start. Meanwhile, Angela Merkel is anticipated to win a fourth term as German Chancellor Sunday.

“Bottom line: A largely benign European political backdrop looks to be setting the stage for a favorable investment environment in the near term,” according to BlackRock. “This adds to sustained above-trend growth and ongoing monetary accommodation…. We prefer European equities to credit in this environment.”

Subscribe to our free daily newsletters!
Please enter your email address to subscribe to ETF Trends' newsletters featuring latest news and educational events.